Acquisition of land under the Land Acquisition Act, 1894, once completed with possession taken, results in absolute vesting in the Government, beyond the control of the acquiring body. A statutory Board, which is merely a beneficiary of acquisition, has no authority to return acquired land without the Government’s sanction. An agreement that seeks to circumvent statutory provisions and the sovereign power of eminent domain is against public policy and unenforceable. Arbitral awards that uphold such illegal agreements violate the fundamental policy of Indian law and must be set aside under Section 34 of the Arbitration and Conciliation Act, 1996.

The Supreme Court allowed the appeal and set aside the arbitral award. Held that once land vests in the Government after acquisition, even the beneficiary Board has no right to transfer or return it. The agreement dated 30.09.1988 was void ab initio, being in contravention of the fundamental policy of Indian law. The arbitral award upheld an illegal contract and was against public policy, warranting its annulment. The Delhi High Court erred in failing to set aside the award under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996.

Acts and Sections Discussed:

• Constitution of India, 1950 – Article 300A (Right to Property)

• Land Acquisition Act, 1894 – Section 4(1) (Notification of Acquisition), Section 6 (Declaration of Acquisition), Section 16 (Effect of Taking Possession), Section 48 (Withdrawal from Acquisition)

• Arbitration and Conciliation Act, 1996 – Section 34 (Setting Aside Arbitral Award), Section 37 (Appealable Orders)

• Delhi Agricultural Produce Marketing (Regulation) Act, 1998 – Section 5 (Constitution of the Board), Section 6 (Powers of the Board), Section 24(1) & (2) (Acquisition and Transfer of Land)

Subjects:

Acquisition of Land – Power of Eminent Domain – Land Vested in Government – Private Agreement by Beneficiary Board – Conflict with Public Policy – Fundamental Policy of Indian Law – Fraud on Sovereign Power – Arbitrability of Land Acquisition Disputes – Illegal Release of Acquired Land – Violation of Statutory Provisions

Facts

a. Nature of the Litigation

• Appeal before the Supreme Court challenging the arbitral award directing the Delhi Agricultural Marketing Board to execute a conveyance deed in favor of Bhagwan Devi.

b. Who is Asking the Court and for What Remedy?

• The Delhi Agricultural Marketing Board sought to set aside the arbitral award and subsequent court decisions enforcing an agreement dated 30.09.1988, by which the Board had agreed to return part of the acquired land.

c. Reason for Filing the Case

• The Board contended that the agreement was void ab initio, contravened public policy, and was beyond its authority as the land had vested in the Government.

d. What Has Already Been Decided Until Now?

• The Arbitrator upheld the agreement, directing the Board to execute the conveyance deed.

• The Delhi High Court, under Sections 34 and 37 of the Arbitration and Conciliation Act, upheld the arbitral award.

• The Supreme Court reviewed these findings.

Issues

1. Whether the Delhi Agricultural Marketing Board had the authority to return a portion of acquired land without the Government’s sanction?

2. Whether the agreement dated 30.09.1988 violated public policy and fundamental principles of law?

3. Whether the arbitral award upholding the agreement was liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996?

Submissions/Arguments

By the Board (Appellant)

• The land, once acquired and possession taken, vested absolutely in the Government.

• The agreement was executed without legal sanction and was contrary to the statutory scheme.

• Returning the acquired land through a private agreement undermined the power of eminent domain.

• The arbitral award was against public policy and liable to be set aside.

By Bhagwan Devi’s Legal Representative (Respondent)

• The agreement was a valid contractual obligation entered into by the Board.

• The Board had resolved to settle the dispute and executed the agreement accordingly.

• The arbitral award merely enforced a binding contract.